We are witnessing significant changes to our nation’s retail landscape with the collapse of many established retailers and intensifying international competition. How can Australian retailers survive in this environment?
Our changing landscape
Over the past 12 months, some big retailers have collapsed in Australia, including Dick Smith, Topshop Australia, Pumpkin Patch, Masters, Laura Ashley Australia, Payless Shoes, Marcs, David Lawrence and Howards Storage World, just to name a few.
Other large stores, such as Target and Big W, continue to report losses of millions of dollars each quarter, despite implementing organisational restructures.
It has been speculated that the causes of such failures include declining sales, lack of stock control, lack of diversification, failure to innovate and online competition.
In 2017, the retail landscape is expected to get tougher as a string of international retailers look set to hit our shores to take a slice of the $222 billion retail market in Australia.
The big brands purported to be coming to Australia include Lidl (a German supermarket success story that is expected to rival Coles, Woolworths and Aldi), Decathlon (a French sporting goods retailer set to rival Rebel Sports and Amart Sports), John Lewis (a UK brand that sells homewares and manchester to rival Sheridans, Adairs and Target), Debenhams (a UK fashion retailer to rival Myers) and finally the big one, Amazon (the US behemoth that rivals everyone with just about everything).
So how can a retailer in Australia survive in this environment?
A recent survey conducted jointly by Bentleys SA and Business SA with retail shoppers and retail business owners provides some insight. The research suggests that to remain competitive, retailers need to ensure:
- They are offering customers what they want
- They have a strong value proposition
- They are engaging with customers in-store in ways they will enjoy and remember
- They continue to know, learn from and build relationships with their customers
- They improve their understanding of the appeal of local products to consumers.
Most importantly, the research highlights the need to have a robust business model in place, with strategies that deliver enjoyable customer experiences, encourage repeat purchases and foster customer loyalty. Depending on the business model, engagement strategies may include digital channels. Omnichannel marketing strategies will be relevant to some, but not all. Full findings of the survey can be downloaded here.
What is clear is that retailers cannot be stagnant. They must be nimble to respond to changing market conditions, be customer centric to remain a preferred provider, and build robust models that serve to build profitable, long-term customer relationships.
Most retail failures don’t happen overnight. They are generally a result of inaction by owners and executives over a period of time. If a retailer starts to experience competitive pressures that they are not equipped to respond to, we would encourage them to seek support from a knowledgeable business advisor. If they start to experience financial difficulties, we would suggest they contact a corporate recovery expert. In both cases, the earlier the better.